Average salary in the US: How outsourcing benefits the US economy

Most people think companies that outsource only think about cutting costs and generating more profit out of their efforts. However, it is more than simple “profiteering.”

Offshoring is a great way to maintain operations and maximize expansion.

Small and medium businesses do not have the capacity to hire local employees the same way large companies do. This is why they need a better way to fill the roles they need without shelling out too many resources.

To understand this concept, companies should know the basic aspects of running a business, including the operational costs in their country and the average salary.

This article delves into what business owners need to know about the average salary in the US.

The national average salary in the US

According to Forbes and the US Bureau of Labor Statistics, the average annual salary in the US is US$59,428.

The median income per week in the fourth quarter of 2023 reached US$1,145, 5.5% higher than in 2022.

In the country, the latest figure can be both a good salary and an insufficient one, depending on various factors that affect it.

Pay variations for US workers

In the US, workers are paid either hourly or fixed salary. Their pay variation is mainly determined by job type, education level, and company practice.

The majority of US employees are hourly workers, according to 2022 data by the Bureau of Labor Statistics. They account for more than half (55.6%) of employees in the country, around 78.7 million workers.

Factors that affect the average salary in the US

Here are the main factors that affect the average salary in the US.

Geographical location

The different cost of living calculations for each state usually determines how much a person could earn in a month.

In 2023, the states with the highest average salaries are Massachusetts (US$76,600), New York (US$74,870), and California (US$73,220).

The states with the lowest salaries, meanwhile,

Gender and race

Demographics such as race and gender also play a role in how much a worker receives.

For instance, with the existence of a gender pay gap, men earn a median salary of US$65,590 while women earn a median of US$53,427.

Occupation

Occupation gradually impacts how much a worker earns in the US.

According to statistics by Investopedia, the healthcare industry has the highest-paying jobs in 2023. Some of these roles include cardiologist, with a median annual wage of US$353,970, and anesthesiologist (US$331,190).

Educational attainment

More education pays off in the US, according to BLS data. A college graduate could earn as much as US$3,120 monthly, while a person with a higher degree could earn US$3,881 per month.

Age

While salary could vary by age, it can also be affected by the pay differences between men and women.

The average salary in the US compared to offshore countries

Numbeo ranks the US as the fourth highest average salary in the world, next to Switzerland, Singapore, and Australia.

With the high cost of living and skill shortage in the US, investing in local teams won’t always be ideal, especially for small businesses. Alternatively, they can delegate their functions offshore to maximize their savings and increase revenue in return.

Below are a comparison of the average salary in the US and other offshoring countries. 

India

The average salary in India as of 2022 is INR 33,120.47 or US$438, a far cry from the average salary in the US.

India is one of the preferred offshoring destinations for US companies in IT, development, and tech support services. Most companies that outsource their services to India enjoy substantial cost savings and maximized returns, especially during the pandemic.

For instance, companies can save more when hiring software developers in the country than their local counterparts.

The Philippines

Unlike the average salary in the US, the Philippines is way lower, at least Php 15,200 or US$308.

As the leading destination for customer support and voice services, the Philippines provides the best English-speaking and culturally-inclined team.

Eastern Europe

Lastly, Eastern Europe competes in outsourced technology and development services. Two of its destinations, Poland and Ukraine, are some of the most sought-after destinations in the region.

The average salary in Poland is PLN 6,156.25 or US$1,286.13. It does not offer tons of savings as the Philippines or India. However, clients can still look forward to cutting their costs by up to 30%, getting quality work, and ensuring the highest level of data protection.

In Ukraine, meanwhile, employees earn an average of 14,577 UAH or US$391.94. Despite the conflict with neighboring Russia, the country continues to recuperate and prides itself as a rising outsourcing provider.

How outsourcing benefits the US economy

Debates and hesitations about outsourcing still spread among US firms, raising questions about cheap labor and taking away jobs to local employees.

BPOs practice neither of the things mentioned. Besides, delegating services to offshore destinations frees companies to an extent, allowing them to create further value for their products and services, their organization, and even the US economy.

For starters, outsourcing creates the following benefits for the US.

Keeps companies competitive

Cost savings are not simple benefits that companies enjoy to earn more. The savings they get from outsourcing keep their organizations running, making them more competitive in their local markets.

Generates more valuable jobs

At the same time, businesses only delegate low-value and repetitive work to free their efforts from these tasks. This helps them create more high-value roles for more local employees who need them.

Encourages business continuity

Lastly, a shutdown is one of the biggest threats to businesses during a crisis, causing a domino effect on employment and the economy in return.

Outsourcing keeps a firm’s operations going despite these crises. As a result, they can generate more jobs, contribute to the economy, and help it recover in the long run.